Annual Report - ESB Retired Staff Homepage

MPF 2009 Annual Report:MPF 2004 Annual Report 20/08/2010 10:00 Page A 

MPF 

ESB Staff Medical Provident Fund 

Annual Report 

Year Ending 31st December 2009

MPF 2009 Annual Report:MPF 2004 Annual Report 20/08/2010 10:00 Page B

MPF 2009 Annual Report:MPF 2004 Annual Report 20/08/2010 10:00 Page 1 

MPF Annual Report Year Ending 31.12.2009 

CONTENTS 

Board of Trustees 2 

Manager’s & Adviser’s 2 

Operational Statistics 3 

Membership Profile 3 

Report of Trustees 4 

Administration 7 

Trustees’ Responsibilities 7 

Report of Auditors 8 

Income & Expenditure Account 9 

Balance Sheet 10 

Accounting Policies 11 

Notes to Financial Statements 12 

Notice of AGM 15 

Contact Addresses and Numbers 16 

This Report and the Members Guide to Benefits and Subscription Rates can 

be viewed by serving staff on the ESB Intranet (Click on Staff Services and 

Health Insurance) and by retired members on www.esbretiredstaff.ie. 

Application forms for membership and benefit claims can also be downloaded 

from both sites. 

E-mail Address: mpf@esb.ie 

Produced by MPF Medical Provident Fund © MPF 2010



BOARD OF TRUSTEES 

ESB Appointees 

Cathy Casey 

Niall Dineen 

James O’Loughlin 

Marguerite Sayers 

Elected 

Helen Henry 

Dan Hickey 

Joe La Cumbre 

Martina Mannix 

ADVISERS AND MANAGERS 

Actuary 

Mercer Human Resource Consulting Limited 

Auditors 

Group Internal Audit, ESB 

and Whelan Dowling 

Bankers 

Allied Irish Banks Plc. 

Custodians 

Citibank N.A. 

Investment Advisers 

Mercer Human Resource Consulting Ltd. 

Investment Managers 

Irish Life Investment Managers 

Fund Manager 

Dave McCabe 

2



OPERATIONAL HEADLINES FOR 2009 

31.12.08 31.12.09 

€000’s 

€000’s 

Subscription Income 26,209 29,357 

Claims & Other Expenditure 26,469 30,337 

Operating Surplus/Deficit (260) (980) 

Investment Income after tax 157 114 

Realised/Unrealised Investment Gains/Losses (6,016) 3,607 

Surplus transferred to Reserves (6,119) 2,741 

Market Value of Reserves 23,220 25,961 

Number of approved Claims 31,739 32,325 

Membership 27,243 26,633 

MEMBERSHIP PROFILE 

31-Dec-08 

31-Dec-09 

Ordinary Scheme 

Staff 2,763 2,666 

Retired 1,290 1,332 

Adult Associates 6,334 6,177 

Children (Under 18) 5,116 4,768 

Number in Ordinary Scheme 15,503 14,943 

Extra Benefits Scheme 

Staff 3,478 3,205 

Retired 2,729 2,957 

Adult Associates 5,267 5,265 

Children (Under 18) 266 263 

Number in Extra Benefits Scheme 11,740 11,690 

Total Membership 27,243 26,633 

3



REPORT OF THE TRUSTEES 

This Annual Report of the ESB Staff Medical Provident Fund explains the main objectives of the 

Fund, outlines the main issues facing the Trustees and also includes the audited financial statements 

for the fund year ending 31 December 2009. An abridged version of this report has been issued to 

each subscriber. 

Both reports give key information to provide you with a good overview of the financial and long-term 

position of the Fund. The Accounts and the related notes, which form part of the Financial 

Statements are included in pages 9 to 14 of this report and have been audited by Whelan Dowling 

& Associates, Chartered Accountant & Registered Auditor on behalf of Group Internal Audit, ESB. 

The Accounts were approved by the Trustees on 22 June 2010. 

Objectives of the Fund 

Since being founded in 1955, MPF has as its objective the assisting of members in the payment of 

medical expenses. This includes both inpatient and outpatient costs with a priority being applied to 

maintaining the best possible inpatient cover. As a health insurance provider, MPF is regulated under 

the Health Insurance Act 1994 – S.I. No. 80 of Health Insurance Act, 1994 (Registration) 

Regulations, 1996 and subsequent Acts and Regulations. 

Financial Results 

An operating deficit arises for the year under review. Claim expenditure exceeded Subscription 

income by €825,397. When administrative expenses, bank interest, tax is taken into account the 

overall operating deficit was €866,262. 

For 2009, contributions increased by 12% to €29.357 million but expenditure on benefits was up 

by 14% to €30.183 million. This reflects not just an increase in the cost of these claims but also the 

effect of an upward trend in actual claim numbers, which increased to over 32,000 for the year. 

The good news is that we had a major improvement on investment markets and the return on invested 

reserves for the year was a very positive + 20.2%. After providing for Tax the gains amounted to 

over €3.6 million. 

These gains less the operating deficit allowed for a surplus of €2.741 million to be transferred to 

Reserves. The value of the Fund increased to €25.961 million. 

4



Investments 

The reserves of the Fund are managed under contract by Irish Life Investment Managers (ILIM). On 

the recommendation of our advisers, Mercer Limited, we have divided the invested reserves between 

global equities (65%) and government bonds (35%). 

For the equity portion, the ILIM mandate is to manage the Fund in order to match a benchmark return 

based on the FTSE Eurobloc Index and the FTSE World ex-Eurobloc indices. ILIM are required to 

select stocks that closely match those in the indices. This is called passive or index investment management. 

For the fixed interest portion of the Fund, the investment manager is required to outperform a composite 

benchmark index comprised of 75% Merrill Lynch over 5 year bonds and 25% Merrill Lynch 

under 5 year bonds. 

The overall performance for the year was +20.2% against a benchmark target of +20.4%. At this 

stage of 2010, markets have continued to stay in positive territory. 

The EU non-life insurance directive requires that the minimum solvency level for the our type of fund 

must not be less than 26% of the average cost of benefit claims over the previous three year period. 

The value of the reserves is well in excess of this requirement. 

The Irish Health Insurance system 

The Government recently reiterated its commitment to supporting the established community rated 

system in this country. This means that all insured members of any particular scheme pay the same 

premium for the same range of benefits. The intention is that younger healthier members continue to 

support older members thus maintaining an inter-generational support for the system. 

The Minister also announced some months ago that a new Risk Equalisation Scheme was being prepared 

for launch in a few years time. In the meantime, the levy/tax credit interim arrangements would 

continue for all commercial insurers but excluding Restricted Membership Undertakings like MPF. 

The exclusion of MPF is depriving us of an opportunity to avail of credit payments in respect of our 

older members and is of continuing concern for the Trustees. We will be seeking that MPF be allowed 

to join the new Risk Equalisation scheme when it is launched. 

5



The Future 

While we continue to press for inclusion of all health insurance subscribers in general national 

schemes, other avenues are also being explored such as: 

•Introducing a new health Insurance plan, which would have more modest benefits than either the 

Ordinary or Extra Benefit schemes but would consequently be more keenly priced 

•Linking up with another health insurer, if this could provide mutual benefits and also help safeguard 

the long-term future of MPF members 

Subscription Rates 

As stated last year, while we are generally experiencing a period of negative price inflation, medical 

inflation continues at levels around +8%. When this is coupled with our older age profile, we have little 

option but to increase subscription rates annually or cut benefits. We are aware that some members, 

especially those who are on pension are now becoming more conscious of the level of premiums 

required. The general view is that members do not wish to see major cuts in benefits within the 

existing two schemes. 

It is expected that the possible introduction of a third scheme with reduced premiums and more modest 

benefits may be of interest to some members. 

Benefits 

The benefits provided by MPF schemes are outlined in the Members Guide to Benefits and 

Subscription Rates, which issued to each subscriber in early January 2010. If you have mislaid your 

Guide, a further copy can be obtained from the Limerick office or immediate access is available via the 

ESB Intranet or the retired staff web-site – www.esbretiredstaff.ie 

Membership 

Total membership at 31 December 2009 was 26,633, a reduction of 610 on the previous year. The 

major element of this reduction is made up of associate child members exiting the fund when they are 

no longer dependants of the main member. When deaths etc. are also taken into account, the number 

of new joiners exceeded the number of resignations from the Fund in the year. The Trustees are also 

happy that while health insurance is becoming more expensive in Ireland the quality of the health insurance 

plans on offer by MPF is reflected in the continuing loyalty of our membership. A profile of membership 

is shown on Page 3. 

If you are a member of the Ordinary Scheme, please consider transferring to the Extra Benefits scheme 

at an early age rather than waiting until a serious medical problem arises. It is important to take account 

of the higher cover available in this scheme for both inpatient and outpatient treatments. Shortfalls can 

6



arise in Beacon, Mount Carmel, Whitfield and Mater Private Hospitals and in both in Blackrock and 

Galway Clinics and if you avail of private accommodation in any hospital. 

Membership is open to all staff in ESB Group. If you leave ESB on voluntary service, you can retain 

membership if you are in receipt of ongoing pay/pension from ESB or have preserved pension rights. 

Administration 

The MPF Office in Limerick administers scheme benefits and membership, arranges collection of 

subscriptions and makes payments to members, hospitals, consultants and other service providers. 

The Office also provides general advice and support on cover. 

Over 32,000 claims were assessed and processed during 2009. The Trustees wish to express their 

gratitude to everyone in the MPF Team for continuing to provide both a considerate and efficient service, 

which is appreciated by members and all other stakeholders. 

The administrative expenses of operating the office, with the exception of certain professional fees, 

are borne directly by ESB. The Trustees acknowledge this ongoing support as they do the contribution 

of EAP Officers and many other individuals within ESB. 

Respective responsibilities of Trustees and Auditor 

The Trustees are responsible for the preparation of the financial statements in accordance with generally 

accepted accounting practice in Ireland including the accounting standards issued by the 

Accounting Standards Board and published by the Institute of Chartered Accountants in Ireland, and 

in accordance with Rule 16 of the ESB Staff Medical Provident Fund. 

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory 

requirements and International Standards on Auditing (UK and Ireland). 

7



Report of the Auditors 

We report to you our opinion as to whether the financial statements give a true and fair view, in 

accordance with generally accepted accounting practice in Ireland. We also report to you whether 

in our opinion, proper books of account have been kept by the Fund and whether the information 

given in the Trustees’ Report is consistent with the financial statements. In addition, we state 

whether we have obtained all the information and explanations necessary for the purposes of our 

audit and whether the Fund’s balance sheet and its income and expenditure account are in agreement 

with the books of account. 

Basis of Audit Opinion 

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) 

issued by the Auditing Practices Board. An audit includes examination on a test basis, of evidence 

relevant to the amounts and disclosures in the financial statements. It also includes an assessment 

of the significant estimates and judgements made by the Trustees in the preparation of the financial 

statements, and of whether the accounting policies are appropriate to the Fund’s circumstances, 

consistently applied and adequately disclosed. 

We planned and performed our audit so as to obtain all the information and explanations which we 

considered necessary in order to provide us with sufficient evidence to give reasonable assurance 

that the financial statements are free from material misstatement, whether caused by fraud or other 

irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation 

of information in the financial statements. 

Opinion 

In our opinion the financial statements give a true and fair view of the state of the Fund’s affairs as 

at 31 December 2009 and of its results for the year then ended and have been properly prepared 

in accordance with generally accepted accounting practice in Ireland and the applicable rules of the 

fund. 

We have obtained all the information and explanations we consider necessary for the purposes of 

our audit. In our opinion, proper books of account have been kept by the Fund. The financial statements 

are in agreement with the books of account. 

In our opinion the information given in the Trustees’ Report is consistent with the financial statements. 

Whelan Dowling & Associates 

Chartered Accountants & Registered Auditors, 33 Westland Square, Dublin 2 

29th April 2010 

8



ESB STAFF MEDICAL PROVIDENT FUND 

INCOME AND EXPENDITURE ACCOUNT 

FOR YEAR ENDED 31 DECEMBER 2009 

INCOME Notes 2008 2009 

€ € 

Contributions 2 26,209,258 29,357,304 

Claims 3 (26,404,880) (30,182,701) 

Gross Profit/Deficit (195,622) (825,397) 

Administrative Expenses 4 (64,062) (155,065) 

Operating Profit/Deficit (259,684) (980,462) 

Investment Income 195,700 149,565 

Tax on Investment Income 5 (39,140) (35,365) 

Sub total 156,560 114,200 

Surplus/Deficit before unrealised gains (103,124) (866,262) 

Unrealised Gain (7,812,594) 4,939,709 

Capital Gains Tax Provision for 

unrealised gains 5 1,796,897 (1,332,642) 

SURPLUS FOR YEAR 10 (6,118,821) 2,740,805 

APPROPRIATED AS FOLLOWS: 

To Reserves 820,320 (2,198,904) 

To Revaluation Reserve (6,939,141) 4,939,709 

Statement of total recognised gains and losses 

The fund has no recognised gains and losses other than those included in the Income and 

Expenditure account above and therefore, no separate statement of total recognised gains and 

losses has been prepared. All the activities of the fund are classified as continuing. 

9



ESB STAFF MEDICAL PROVIDENT FUND 

BALANCE SHEET AS AT 31 DECEMBER 2009 

FINANCIAL ASSETS Notes 2008 2009 

€ € 

Investments 6 24,471,195 29,410,904 

CURRENT ASSETS 

Debtors 7 1,918,769 810,117 

Cash at bank and in hand 8 

___________ 

3,585,772 

___________ 

4,333,359 

___________ 

5,504,541 

___________ 

5,143,476 

Creditors: amounts falling due 

within one year 9 (6,755,347) (8,593,186) 

Net Current Liabilities (1,250,806) (3,449,710) 

Total Assets less Current 

Liabilities 23,220,389 25,961,194 

Net Assets 23,220,389 25,961,194 

Financed by: 

Reserves 

Revenue Reserve 10 23,106,916 20,908,012 

Revaluation Reserve 10 113,473 5,053,182 

Members' Fund 23,220,389 25,961,194 

The financial statements were approved and authorised for issue by the Trustees 

on 22 June 2010 

10



1. STATEMENT OF ACCOUNTING POLICIES 

The following accounting policies have been applied consistently in dealing with items which 

are considered material in relation to the fund's financial statements: 

1.1 Basis of Preparation 

The audited financial statements are prepared in accordance with generally accepted accounting 

principles under the historical cost convention, with the exception of financial investments 

which are stated at market value. 

Accounting standards generally accepted in Ireland in preparing financial statements giving a 

true and fair view are those published by the Institute of Chartered Accountants in Ireland and 

issued by the Accounting Standards Board. 

1.2 Financial Investments 

Financial Investments are stated at market value. Unrealised gains/losses on investments are 

calculated as the difference between the market valuation of those investments at the balance 

sheet date and their valuation at the previous balance sheet date or their purchase price if purchased 

during the year. Realised gains/losses are determined on an average cost basis. Both 

unrealised and realised gains/losses are recorded in the Income and Expenditure Account. 

1.3 Deferred Taxation 

Deferred tax is recognised in respect of all timing differences that have originated but not 

reversed at the balance sheet date where transactions or events have occurred at that date that 

will result in an obligation to pay more, or a right to pay less or to receive more tax relief, with 

the following exceptions: 

Provision is made for tax on gains arising from the revaluation (and similar fair value adjustments) 

of fixed assets and gains on disposal of fixed assets that have been rolled over into 

replacement assets, only to the extent that, at the balance sheet date, there is a binding agreement 

to dispose of the assets concerned. However, no provision is made where, on the basis 

of all available evidence at the balance sheet date, it is more likely than not that the taxable gain 

will be rolled over into replacement assets and charged to tax only where the replacement 

assets are sold. 

1.4 Contributions 

Contributions received represent the total value of premiums received from the members of the 

fund during the year. 

11



2. Income 

The total income of the fund for the year has been derived from its principal activity, wholly 

undertaken in Ireland. 

3. Claims 

Claims incurred comprise claims and related expenses paid in the period and changes in the 

provisions for outstanding claims, including provisions for claims incurred but not reported and 

related expenses. Where applicable, deductions are made for recoveries. 

The fund takes all reasonable steps to ensure that it has appropriate information regarding its 

claims exposures. However, given the uncertainty in establishing claims provisions, it is likely 

that the final outcome will prove to be different from the original liability established. 

The estimation of claims incurred but not reported is generally subject to a greater degree of 

uncertainty than the estimation of the cost of settling claims, where more information about the 

claim event is generally available. 

The provision for outstanding claims €7,360,000 (2008 - €6,620,000) note 9, is based on 

post year-end information and a reasonable estimate of expected but unreported claims. 

4. ADMINISTRATIVE EXPENSES € € 

2008 2009 

Health Insurance Authority Levy 36,450 41,353 

Professional Fees 17,571 19,169 

Advances not recoverable 10,041 94,543 

64,062 155,065 

5. TAXATION 

Tax on Investment Income 39,140 35,365 

CGT provision on unrealised gains (1,796,897) 1,332,642 

CGT on realised gains 0 0 

(1,757,757) 1,368,007 

Tax on investment income is charged at 25% of the total investment income. Capital Gains Tax on 

realised and unrealised gains is charged at 25% of the total gains. An additional 3% taxation 

charge applies to gains within a unitised fund. 

12



6. FINANCIAL INVESTMENTS Market value 

€ 

At 1 January 2009 24,471,195 

Unrealised gains 

___________ 

4,939,709 

At 31 December 2009 

___________ 

29,410,904 

Market Value 2008 2009 

€ € 

Unitised equities 16,018,844 19,522,958 

Bonds & Gilts 

___________ 

8,452,351 

___________ 

9,887,946 

___________ 

24,471,195 

___________ 

29,410,904 

7. DEBTORS 2008 2009 

€ € 

Outstanding contributions 1,292,428 453,482 

Claims advances outstanding 361,702 336,811 

CGT asset on unrealised loss 232,190 0 

Accrued Income – Interest Receivable 

___________ 

32,449 

___________ 

19,824 

___________ 

1,918,769 

___________ 

810,117 

8. Cash at bank and in hand 2008 2009 

€ € 

Bank Overdraft (952,874) (1,610,817) 

AIB Deposit Account 1,019,453 2,327,374 

AIB Call Deposit Accounts 

___________ 

3,519,193 

___________ 

3,616,802 

___________ 

3,585,772 

___________ 

4,333,359 

The bank overdraft is due to uncashed cheques at the year end. It is replenished from the deposit 

account, as required, to avoid any interest charges arising. 

13



9. CREDITORS: 2008 2009 

€ € 

Provision for outstanding claims (Note 3) 6,620,000 7,360,000 

Withholding tax provision 105,749 124,178 

Income tax provision 18,254 (6,347) 

CGT provision on unrealised gains 0 1,100,452 

Accruals – Professional Fees/Levies 

___________ 

11,344 

___________ 

14,903 

___________ 

6,755,347 

___________ 

8,593,186 

10. RESERVES 

Revenue Revaluation 

Reserve Reserve Total 

€ € € 

At 1 January 2009 23,106,916 113,473 23,220,389 

Increase/Decrease in reserves 

___________ 

(2,198,904) 

___________ 

4,939,709 

___________ 

2,740,805 

At 31 December 2009 

___________ 

20,908,012 

___________ 

5,053,182 

___________ 

25,961,194 

11. CAPITAL COMMITMENTS 

No capital commitments existed at 31 December 2009. 

12. CONTINGENT LIABILITIES 

There were no contingent liabilities at 31 December 2009. 

14


ANNUAL GENERAL MEETING 

In accordance with Rule 9.3, the Trustees have convened the Annual General Meeting of the ESB 

Staff Medical Provident Fund. The details are as follows: 

Date: Thursday, 16 September 2010 

Time: 

Venue: 

8.00 pm 

Maryborough House Hotel, Cork 

AGENDA 

1. Minutes of AGM held on 10 September 2009 

2. Trustees Annual Report for year ended 31 December 2009 

3. Audited accounts for year ended 31 December 2009 

4. Any other Business 

15


Addresses and Contact Numbers for MPF Personnel 

The e-mail address for MPF is mpf@esb.ie. 

Phone Numbers 

e-mail address 

Internal External 

Catriona Hurley 55306 061-430506 Catriona.Hurley@esb.ie 

Noreen Ryan 55211 061-430411 Noreen.Ryan@esb.ie 

Ciaran O'Callaghan 55323 061-430523 Ciaran.OCallaghan@esb.ie 

Anne Johnson 55361 061-430561 Anne.Johnson@esb.ie 

Michelle Carney 55381 061-430581 Michelle.Carney@esb.ie 

Eimear Barrett 55386 061-430586 Eimear.Barrett@esb.ie 

John Conneely 55274 061-430474 John.Conneely@esb.ie 

Dave McCabe, Fund Manager who also acts as Secretary to the Trustees and as Compliance Officer 

for the Fund is based at 27 Lower Fitzwilliam Street, Dublin 2 - Phone Number 087-9971078. e-mail: 

David.McCabe@esb.ie 

All claim and membership correspondence should be forwarded to the Limerick Office. If posting 

externally please use the following address: 

ESB Staff Medical Provident Fund, P.O. Box 384, Rosbrien, Limerick 

16

MPF 2009 Annual Report:MPF 2004 Annual Report 20/08/2010 10:00 Page C

MPF 2009 Annual Report:MPF 2004 Annual Report 20/08/2010 10:00 Page D 

ESB Staff Medical Provident Fund 

27 Lower Fitzwilliam Street 

Dublin 2.

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